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 Posted: Thu Aug 30, 2007 7:57 am Subject: YAY!!!! CASH CALL GOES DOWN!!!
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| Quote: | CashCall makes its own call for cash
The Fountain Valley lender that provides emergency funds for people is scrambling for a capital infusion.
By Kathy M. Kristof, Los Angeles Times Staff Writer
August 23, 2007
With Gary Coleman as its TV pitchman, CashCall promises money in a hurry to people who are low on cash.
But now the Fountain Valley lender is in the same bind as its customers.
The company stopped making loans this week and was scrambling to negotiate an infusion of capital so it can resume business, said Daniel Baren, the company's general counsel. CashCall also laid off about 80 of its 1,200 employees, he said.
"The reason we had to stop originating is because of the same liquidity squeeze that's affecting everybody else," Baren said. "We are doing everything we can to get back to normal as soon as possible, and we are fairly optimistic that will happen."
CashCall's website isn't quite as informative, making no mention of the liquidity problem.
"The site is down for routine maintenance. Please try again later," the website says.
Baren said the website was being revamped and that CashCall hopes that it will resume limited operations in California as early as today.
However, the company will not immediately resume originating loans for out-of-state borrowers, he said.
The final loans in its pipeline were funded on Monday, Baren said.
Lee Eakin found out that the CashCall spigot had run dry late Tuesday. The owner of Big Lee Bail Bonds in San Jose said he frequently referred cash-strapped clients to the company.
But when he called to inquire about loans on Tuesday, company representatives said they weren't making loans and didn't know when they might again.
"Our lenders are dropping like flies," Eakin said. "It's an overnight sensation."
CashCall's troubles are another sign that the lending crisis has spread beyond sub-prime lenders who made mortgage loans to people with shaky credit.
Rising defaults have forced many of these lenders out of business. In recent weeks, the financing crunch has spread and widened, stalling the market for high-quality corporate debt, as well as the market for large mortgage loans for credit-worthy borrowers.
All of these loans are largely financed by private investors, who buy shares in debt "pools" put together by big investment banking firms on Wall Street. Without cash from these investors, liquidity on Wall Street has dried to a trickle, leaving lenders and consumers short of cash.
CashCall was founded in 2003 by John Paul Reddam, who also founded (and later sold) Costa Mesa mortgage lender DiTech Funding Corp. Reddam has said in past interviews that he had gotten the idea for CashCall at DiTech, where the company would make second mortgages not backed by the home's equity.
An avid horse racing fan, Reddam was profiled in The Times Sports section in April as he was preparing to enter two horses -- including one named Liquidity -- in the Kentucky Derby. Liquidity placed 14th in a field of 20.
His company makes emergency loans from $2,600 to $10,000 with a one-day turnaround.
But the interest rates range from 21% to 96%, Baren said. The high rates reflect the risk of the loans; the company estimates that 1 in 5 ends in default.
CashCall gained prominence after receiving a now-legendary call from Coleman, the former child TV star from "Diff'rent Strokes."
Coleman, who said he'd lost his fortune to bad financial advice, was looking for a loan. He got his money and repaid the debt by becoming the company's pitchman. Coleman's star power and an $18-million annual ad budget fueled rapid growth in CashCall.
Until recently, Baren said CashCall was funding about $20 million a month in loans to Californians and $30 million in loans to residents of Nevada, Utah, New Mexico and Idaho.
In other states, it served as the marketing arm for an independent bank that originated loans and resold them to CashCall.
In addition to Fountain Valley, the company has major operations in Anaheim, where it sub-leases 128,000-square feet of space formerly held by the parent of Ameriquest Mortgage Co., the sub-prime lender that itself has downsized as part of the mortgage meltdown. |
They are now only lending to California residents. So they aren't totally down, but this is still great news!!!
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goudah2424
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Posted: Thu Aug 30, 2007 8:01 am Subject:
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Horray!!!!!!
Goudah you do have a way of brightening up my day
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kashzan
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Posted: Thu Aug 30, 2007 8:04 am Subject:
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It would be better if they totally shut down . . . . But this is a step in the right direction!
That article makes me look at DiTech in a whole different way . . . . I would never get a home loan from them now!
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goudah2424
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Posted: Thu Aug 30, 2007 8:14 am Subject:
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1 in 5 loans ends in default. How are the other 4 making the payments with intrest up tp 96% .I wonder how they manage to live.Yes it is a step in the right direction. I hope against hope that they do not get the infusion if cash. Let them shut down.
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kashzan
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Posted: Thu Aug 30, 2007 8:20 am Subject:
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Yea!!!! You are right, it is a step in the right direction! Now, if the others will follow suit, maybe they will all fall like dominoes!!..Karen
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Bossy4455
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Posted: Thu Aug 30, 2007 9:10 am Subject: Cash Call
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Hey, Goudah2424.....NOW I understand why they were 'seling' alot of their accounts. If you remember, I found out that my account, with them, was 'sold' to a CA. WOW>>>wonderful!!!
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sdchargers_63
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Posted: Thu Aug 30, 2007 9:18 am Subject:
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That's too funny about Gary Coleman. He sank so low that he had to do a high interst loan. He couldn't even get a normal bank to lend to him. Funny, but sad, I guess. But, great news about another one having to shut down. I never thought that the sub-prime mess would affect payday lenders like that. DiTech....that was very interesting to read. I'll keep that in mind when I ask people what they're paying on their mortgage and who it's with. Good ammunition to have.
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swedishgirl
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Posted: Thu Aug 30, 2007 9:24 am Subject: Cash Call
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I have a loan through them and have not been able to make payments for 2 months. They want to set up an arbitration hearing. What does tht mean for me? Can anyone help? Thanks
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leashdawg95
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Posted: Thu Aug 30, 2007 9:27 am Subject:
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Yep - That article came out about the same time as the mass sale of defualted accounts.
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goudah2424
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Posted: Thu Aug 30, 2007 9:32 am Subject:
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They have been calling my job and harassing me and whoever answers the phone. I have made a complaint today to the attorney general's office about the calls to the job. They are demanding their money now and said we will sue to get it back. Did anyone get sued by them?
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leashdawg95
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Posted: Thu Aug 30, 2007 9:34 am Subject:
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People have been sued by them, yes.
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goudah2424
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Posted: Thu Aug 30, 2007 9:38 am Subject:
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I see. I am trying to get the money together to make a payment but just don't have it at this time. As far as being sued how do they collect the money? My job does not allow any type of garnishments unless it's child support, taxes or student loans.
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leashdawg95
Joined: 24 Apr 2007
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Posted: Thu Aug 30, 2007 9:42 am Subject:
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It would actually be up to your state laws. If they sued you, and received a judgement, then depending on what your state allows they would either garnish your wages, sieze your bank accounts, or a few other rare things . . . It doesn't matter what your employer allows, because a court order is a court order. Your employer cannot refuse to acknowledge it. If your state laws did not allow garnishments for consumer debts, then the creditor could file a motion with the court to seize any bank accounts you may have, or any assets you may have (although seizing assets is very rare).
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goudah2424
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Posted: Thu Aug 30, 2007 9:46 am Subject:
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OMG...this really brightened my day, Goudah!! I've never dealt with CashCall, but have seen so many horror stories regarding their lending practices that I cringe every time I see someone post that they have a CashCall loan and can't afford the payments, and ask how to stop them....and have to respond that you CAN'T stop them. It kills me to tell people they have no choice but to either continue paying the loan and getting harrassing phone calls when they are late with a payment, or stop paying and get sued - neither choice is an attractive one.
I can't wait to see these leeches go down - completely. Permanently. Forever. Finis.
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SUEBEEHONEY70
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Posted: Thu Aug 30, 2007 1:00 pm Subject: CashCall - collection practices
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After reading the above posted article, I was wondering what happens if they do go under,
I am behind a month and plan on making payment tomorrow, and will continue to make payments to them,
but if they go under what do you think will happen to
all their outstanding accounts, I'll be happy even if
they lower (really lower) the interest rate, at least
then I'll be able to afford the payment as more money
will go towards the loan
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Sharol
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Posted: Thu Aug 30, 2007 1:08 pm Subject:
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I don't know, but I doubt they will forgive all the loans. They will still try to collect on them, they just aren't giving out any new loans.
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goudah2424
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